Loading...
HomeMy WebLinkAbout06.14.10 Work Session Minutes Council Workshop Minutes June 14,2010 Mayor Larson called the workshop to order at 6:00 p.m. Present: Absent: Also Present: Larson, Fogarty, Wilson, May (arrived at 7:33 p.m.) Donnelly Peter Herlofsky, City Administrator; Teresa Walters, Finance Director; Kevin Schorzman, City Engineer; Randy Distad, Parks and Recreation Director; Todd Reiten, Municipal Services Director; Cynthia Muller, Executive Assistant MOTION by Fogarty, second by Wilson to approve the agenda. APIF, MOTION CARRIED. Ice Arena Imnrovement Proiect - Bonestroo Mr. Gary Kristofitz, the Project Construction Manager from Bonestroo explained the change orders for the Ice Arena improvement project. The change order includes: 1. A credit in the amount of$13,701 as the soil was good and the sub-soil drainage system was not needed. 2. Adding a mop sink amounting to $2,995. More room was needed because of the refrigeration system. In changing the use of the room, a sink was removed. Mr. Kristofitz did not know the sink was used for cleaning floors. Once the sink was removed, staff noted they needed a sink for cleaning. The contractor can just put in a sewer line connection. The underground sewer line will be covered within the next week. The cost for the connection would be $500. Mayor Larson agreed with just having the sewer connection stubbed in. CounciImember Fogarty asked if anyone has spoken with the Hockey Association as there may be someone that can install a sink as it is not time sensitive. Mr. Kristofrtz stated it would be better if that person came in once the connection work is completed. Staffhas not contacted the Hockey Association yet, and could also contact local plumbers. CounciImember Fogarty stated her first choice would be to contact the Hockey Association. If they do not have someone that can do this work, then use a local plumber. CounciImember Wilson suggested looking for a local plumber period. CounciImember Fogarty wanted to see if someone from the Hockey Association would do it for free. It was noted it would have to be a licensed plumber. Parks and Recreation Director Distad should contact the Hockey Association, and if necessary, a local plumber within two weeks. 3. Ventilation System - Bonestroo designed the project as three separate projects, the refrigeration, the dehumidification, and the dasherboards. The ventilation system was in the dehumidification project. When the bids were awarded, the ventilation system was in the portion of the contract that was not accepted. Mr. Kristofitz stated it was in the design, but Bonestroo should have informed the City that it needed to be added on. Mayor Larson stated Council was frustrated because Bonestroo knew one or two out of the three projects could have been accepted and knew the ammonia system needed a 16 Council Workshop Minutes June 14, 2010 Page 2 bigger ventilation system. Mr. Kristofrtz agreed they should have caught it once the dehumidification system was not awarded. Bonestroo' s mechanical engineer informed him a couple days later that a ventilation system needed to be included. The original dehumidification bid was $280,232 including the $13,000 ventilation system. It took the contractor a few weeks to get the pricing for just the ventilation system. There is a 15% overhead fee for the contractor or 5% if a sub-contractor does the work. In this case, the prime contractor would do the work. 4. A panic device needs to be added to the doors amounting to $4,418. The architect reviewed the code and all that is required is an exit of any type. This winter the state adopted another rule which applies to this project, but they do not send out notification of the change. The contractor found out when it was inspected. Councilmember Wilson asked when the project was approved. The plans and specs were approved in February with a bid date of March 1. The contract was awarded April 5 and Bonestroo found out about the ventilation system the week after that. Councilmember Wilson asked if staff was notified. Mr. Kristofitz stated it was discussed at a preconstruction meeting on April 22, and mentioned the contractor was gathering pricing. The prices were obtained a couple days prior to the last Council meeting. Councilmember Fogarty asked about the status of the project. The floor is out and they are working on the sub-soil heating system. Getting the equipment in takes several weeks. Welding the piping to the equipment is very labor intensive. This is done towards the end of the project. Over the next month they will be working on the ice rink floor and getting ready to pour the concrete. Council asked to be notified as to when the floor will be poured. Councilmember Wilson stated it sounds like there was communication between staff and Bonestroo, so he asked that in the future Council be notified that a change order could be coming. The change orders will be placed on the June 21, 2010, Council agenda. CIP - Public Works Proiects Having a CIP is an important part of the budgeting process. The CIP presented is similar to what Council saw earlier in the year. This is not just a five year CIP; it also includes another five years into the future. This is because seal coating is on a seven year cycle and there has been some concern with tearing up roads during that lifetime. The annual projects are based on the assumption we will be doing seal coating using franchise fees. Ifwe don't do that, it will impact the numbers. The expansion projects are driven by an increase in population in certain areas and do not have as much of an impact on the bonding numbers as costs are set aside in other funds or paid for by development. Bonding covers the reconstruction and rehabilitation projects. Council and staff discussed what a rehabilitation project entails. A rehabilitation project does not get into utilities. Next, staff reviewed the reconstruction projects. The rehabilitation and reconstruction projects will be removed from the seal coat cycle once staff receives a consensus from Council that this CIP will be followed. Westview Acres has already been removed from the seal coat cycle. Councilmember Wilson asked what analysis has been done regarding overlapping taxation on major projects such as Elm Street and Ash Street or other reconstruction 17 Council Workshop Minutes June 14,2010 Page 3 projects that have been approved in the past 3-5 years. It becomes a heavy burden for the residents who are still paying for one project and then another project is added. City Engineer Schorzman stated whether there have been past assessments for other projects, does not change the need at the time. We can look at it and try to mitigate it, but it does not change the fact something needs to be done. Staffwill review the assessments for Elm Street and Ash Street projects. City Administrator Herlofsky noted staff would like to have a consensus from Council that franchise fees will be used for seal coating. Currently the City assesses 50% for seal coating. City Engineer Schorzman stated Council consensus at the March meeting was to move forward with the franchise fees covering the cost of the project 100% and not have assessments. This process preserves the ability to include non-taxable properties. The reason for this is the road and bridge fund is decreasing. The franchise fees would come from gas and electric utilities. Between the two there would be approximately $200,000 from each. The franchise fee amount discussed at the March workshop would be $2.50/month/utility. This would eliminate the need for assessments for seal coating and should carry us through the next 10 years. There are enough funds left in the road and bridge fund to possibly carry us through next year. There are two ways to charge franchise fees; as a fIxed amount (which is best) or based on consumption. It is the City's decision how to charge the fees. We need to use franchise fees or levy to cover the amount. Audience members Mr. David Pritzlaff and Mr. Jerry Ristow asked questions regarding the franchise fee versus assessments. It was explained the franchise fees is a way to even the payments across the community. The 7-year seal coat schedule would remain the same. Councilmember Fogarty would support franchise fees. Mayor Larson would like to think about it more. City Engineer Schorzman explained the second part ofthe discussion was how to pay for the projects. Do we continue to bond for 100% of the project or look at getting a better value for the taxpayers? Staff wanted to focus on collecting some funds upfront so we can pay for a project in the year we do it. Staff looked at several scenarios and one that will balance out the long term effects on the levy with lower interest payments is collecting $500,000 each year in taxes that would go directly to pay for the project we are doing that year. Over ten years that will save the residents $1.6 million in interest while having very little effect except for the fIrst year on the amount of levy you will have, whether you bond for all of it or levy for part of it for the down payment. City Administrator Herlofsky stated the $500,000 is collected through a levy. It would be a designated amount of levy that would go specifIcally to projects. This is different from the general fund levy and the normal bond portion of the levy. If it is a levy it now becomes an income tax deduction for the residents. If it is an assessment, it is not a reduction on their income taxes. Finance Director Walters stated it would increase the taxes by $100/year. City Administrator Herlofsky explained the portion of the levy that we have for bonds will still be at that same $500,000 which will be in the budget. Finance Director Walters stated the fIrst option is to buy each project individually each year and we will bond for each project each year. The second option is to delay the project a year and 18 Council Workshop Minutes June 14,2010 Page 4 levy for $500,000. In the second option, the fIrst year the increase in the levy will be higher than the way we do it now. The following years the payment will be consistent had we done the project as in the past. It will not eliminate bonding. It is buying down the bond to eliminate interest. City Engineer Schorzman stated it is up to Council whether to use the $500,000 to defer or reduce the assessments on the projects or defer what the rest of the City pays. Mayor Larson stated it is a down payment on the project. Councilmember Fogarty stated her concern is getting five Councilmembers to agree on policy and fIve more in another year. Policies can change. She asked how strongly can we create a fund that is untouchable. City Administrator Herlofsky noted even if it is done for fIve years there is still a benefIt. Councilmember Wilson would like to look at different ways to explore input costs to do the project. City Administrator Herlofsky noted 2007 was the last time we raised taxes which is the same number as 2010. The reason for the high property taxes is the school district did generate a substantial increase in property taxes over the last fIve years. The community was willing to pay for educating youth. (Councilmember May arrived 7:33 p.m.) City Administrator Herlofsky noted the transition of using City staffmore than Bonestroo staff on projects has made a tremendous difference. City Engineer Schorzman stated the rehabilitation projects will be handled inhouse. Testing would be outsourced. Councilmember Fogarty noted staff mentioned an engineering cost of27% and asked staff to look at the last 4-5 projects to see what percent we were at. City Engineer Schorzman stated the 27% expenditure will be changed by the shift in using City staff to do the inspections. The Elm Street and Ash Street projects had very little City staff involvement. Mr. David Pritzlaff noted it was said that City taxes have not been raised since 2008. Over three or four years when a property loses $40,000 or more in value, you cannot say we are not raising taxes. If property taxes are based on the house value and the taxes have not gone down, that is not a fair assumption. Regarding adding $500,000 to the levy for projects to save money, if you raise the levy and split it on the number of people based on property value, if you pay $100 for seven years, will residents be charged for the seal coat project? Finance Director Walters stated the $100 will help reduce the amount of interest so it will reduce the amount of taxes you will have to pay. In the long run, the City will save more on interest payments than you would make putting it in your own account. Ifwe do the projects anyway, which they need to be done, taxes will increase every year for the projects. Regardless whether we assess for the project or not, we still have a portion we need to bond for and the levy would increase every year for the project that will be done in that year. Staff is saying to levy the year before you start the project, so the fIrst year will be the only year you will see the higher increase in the levy. Each of the other years you will be paying less. The taxpayers over ten years will pay less than they would if we were to just do the projects every year. The projects need to be done. Staff is looking at a different way of paying for it. Instead of bonding for the entire project, we are looking at levying for a portion of the project and levying for the portion that is bonded. In the long run it is the same payment. The only time it is not the same payment is the fIrst year. 19 Council Workshop Minutes June 14,2010 Page 5 CIP - Parks City Engineer Schorzman felt it was important for Council to consider a maintenance program for the trails similar to the streets. There is a sealant for trails that costs $lIft. The cost to rebuild a trail is $15/ft. Whether a vehicle drives on them or not, they are still a part of the City's infrastructure. There are 42 miles oftrails. Parks and Recreation Director Distad gave an overview of the five year plan for park improvements. From 2001-2009 $1.9 million has been spent for park improvements from development fees. No tax dollars have been spent. Based on the master plans there is $16.7 million in improvements yet to be made. There are no dedicated funding sources other than development fees. Staff asked if Council wanted to defer the improvements until development resumes and we receive development fees, or levy for the improvements. Staff is hoping to receive some direction from the current Community Survey as to what the residents want. Councilmember Wilson asked about the amount of funding needed for trails. Staff stated it would be approximately $35,000. City Engineer Schorzman suggested collecting funds to maintain trails and also put aside funding for reconstruction oftrails. He suggested $35,000/year for maintenance and $70,000/year for reconstruction of segments. CIP - Vehicles The City is behind by $1.386 million in replacement of vehicles and equipment. A salt storage area would cost $100,000, and a fuel station would cost $150,000. Ifwe cannot obtain salt from the county shed, we would not be able to obtain salt. Councilmember Wilson suggested talking to Lakeville regarding a cooperative agreement for salt storage. Municipal Services Director Reiten stated we are doing that with the county. Empire is also going to the county storage shed. In the future, if the county shed goes away we would have to drive to Hampton for salt. A storage area here would be valuable. City Administrator Herlofsky noted public works is part of public safety. Municipal Services Director Reiten also presented a schedule of vehicle replacements showing where we should be and where we actually are. City Engineer Schorzman asked for Council direction on how to proceed with the public works projects as it will have an impact on the budget. If Council wants to go with the $500,000 levy, staffwill move the projects out one year into the future. City Administrator Herlofsky asked for Council to at least agree or not on the projects and staffwill come back with the cost. Councilmember Fogarty asked for a clarification on some of the projects. Staff felt a water treatment facility would not be needed within the next 10 years. In that case, Councilmember Fogarty asked that the Water Treatment Facility sign be removed and place some sod in the area. Staffwill bring this to the Water Board. Councilmember May confrrmed staff wanted Council to agree with the concept projects and when to complete them. Staff agreed and would like a plan Council agrees to so projects will not be pushed back year after year. Council will use this to prevent duplicating seal coating and tearing up projects. Councilmember May stated as far as the money, she is a big proponent of this type of planning, but unless we talk about cost cutting and saving to some degree when we present this, it will not be pretty. We have to figure out how we combine those two conversations when presenting the plan to the public. Councilmember Fogarty was on board 20 Council Workshop Minutes June 14,2010 Page 6 with getting the projects done, because not getting them done, costs the taxpayers more. She would like more information on the $500,000 levy. Finance Director Walters will prepare a spreadsheet showing how it is laid out. Councilmember May stated if she is a taxpayer and paying $100/year over 10 years, it does not sound like $1.6 million is going to be more than $1,000 in savings. Finance Director Walters stated the $100 will not save you more than you put in. If you do all the projects, it may cost $100/year this way, but it might cost $120/year ifwe did it a different way. Mayor Larson asked that staff only bring necessity items to Council for the budget. Councilmember Wilson would like to see where project taxes are occurring now and ifthere would be an overlap in areas with the projects listed on the CIP. Staffwill bring the CIP for street projects to the June 21, 2010, Council meeting as a discussion item. MOTION by Fogarty, second by Wilson to adjourn at 8:58 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 21